Everyone usually gets pretty good at segmenting customers by ACV. Large, Medium, and Small. Or at least by splitting up sales-driven and self-service revenue. Or enterprise vs smaller customer. And later, we often start segmenting by vertical and industry.
More of you right now should be putting that aside a bit and segmenting your customers into 3 new groups: Growing. Struggling. And Shrinking. And setting different goals for sales and retention for each segment:
- Growing. Almost all of you have at least one segment of customers growing now. Maybe it’s healthcare. Or remote workers. Or call center. Or esports. Or e-commerce. Maybe it’s just 10% of your customer base, but there’s often at least a small piece that is growing faster, at least for now, than before these crazy times.
- Struggling. Some of your customers may, on balance, be struggling but making do. E.g., generic SaaS companies. Many are doing OK but a lot of impacts today. Generally, anyone at 0.1% growth or higher counts here.
- Shrinking (and Dire Straits). This category can just include clients already shrinking in size. E.g., certain categories of startups.
Most of you that I talk to haven’t fully finished segmented your prospects and existing customer base this way. And even if they have, they haven’t broken out clear goals for each segment.
For Growing categories:
- Sales cycles may have lengthened, with more CFO scrutiny for sure, but decent revenue goals can still be hit. Even if the overall company bookings goals might be way, way down.
- And retention should remain high. And there is no reason for NPS not to continue to increase.
For Struggling categories:
- Sales may be way down, but some deals will still close. And pipeline may still grow. Encourage discovery calls. Maybe they can at least close later. You will have to adjust quotas here dramatically. But ideally, sales still at least covers its costs for now.
- Logo retention will take a small hit, revenue retention a higher one. Struggling customers are seeking to cut costs everywhere. But they aren’t seeking to cancel vendors they trust and need. Set an aggressive goal for logo retention in the Struggling segment — not much lower than before. But allow material relaxation of account retention. Seats will shrink. If you don’t relax the goals here materially, you may break customer relationships that will last a decade or longer.
For Shrinking companies and Dire Straights Companies:
- Sales may be on hold. Instead, just see what you can do.
- Scale accounts down quickly, and simply, with these customers. If their business has fallen by 90%, so should your bill. Or maybe even just give them the next 6 months for free. Now is the time to grow share, not revenue, with these customers. Be proactive. They will appreciate it. Take a look at an innovative program from Gorgias.io for their Shrinking customers here.
Whatever you do exactly, it’s time to create 3 new categories of customers. And create different revenue and retention goals for each category.
If you don’t do this, you’ll allow too many excuses. Instead of finding the right goals, and right solutions, for each segment.